members who expect to make a career out of the military prefer to stick with a
traditional pension rather than opt for the retirement reforms recently
proposed by Congress.
latest results of the First Command Financial Behaviors Index reveal that 70%
of middle-class military families (commissioned officers and senior NCOs in pay
grades E-6 and above with household incomes of at least $50,000) who say they
are likely to serve to full retirement want to be grandfathered into the
current retirement system. These
findings are consistent with monthly survey data collected since the Military
Compensation and Retirement Modernization Commission announced its proposal to restructure the traditional 20-year
retirement system as a blended program that includes a reduced pension in
exchange for a lump sum bonus and a new 401(k)-type plan.
career servicemembers are understandably wary of giving up their traditional
pension in favor of matching funds and other elements of defined contribution
plans,” says Scott Spiker, CEO of First Command Financial Services, Inc.
“Defined contribution plans have not worked for middle-class Americans in
building a suitable income for retirement. There is no reason to believe they
will work for our middle-class military force either.”
the survey found many career military members are open to the idea of
retirement reform for their non-career colleagues (that is, the people who
would otherwise leave service without any government-sponsored retirement
savings). Sixty-six percent of survey respondents are in favor of the proposed
blended retirement system. When asked to explain why, those in favor of the
proposed system said it will increase “the amount of people who would be
eligible for benefits” and “provide more financial benefits” for service members.
20-year retirement system has been an important part of our nation’s commitment
to ensuring lifetime retirement security for generations of our men and women
in uniform. Military retirement reform is too big an issue to push through
quickly. We urge caution and propose moving forward at a slow and intentional
pace that reassures our service members and encourages a continued public
debate,” says Spiker.